Stock Markets Exposed

What is the risk in investing in penny stocks?

Public Comments

1. Penny stocks are very risky and that is one of the reasons that companies with low stock prices are not listed on the major stock exchanges.
2. Investing in any stock is risky to begin with - the question you have to ask yourself is, how much do you want to make before you get out? Remember, Smart people can get rich in the stock market, Stupid people can get rich in the stock market, But PIGS always get slaughtered...
3. 1/3 service companies survive past 3 years. 1/5 product companies survive past 3 years. Think carefully, hedging will fail.
4. There are two serious problems with penny stocks. First, they don't trade on a normal exchange and are not subject to normal financial reporting requirements. It can be difficult to find accurate financial information to evaluate them. Second, the prices are easily manipulated by scam artists because many penny stocks have few shares that are regularly traded. It's no secret that many scams use penny stocks. The promoters can buy shares cheaply, promote them unethically, and then sell out at a profit when the victims fall for it and bid up the prices.
5. Penny stocks are definitely risks that are better suited for the investor that likes to go skydiving, skinny-dipping, and bungee jumping. Of course even a few more conservative investors will find some attraction in the low risk promise of hefty payouts that the right penny stock can offer. In fact, many investors dream of being the one to find that perfect penny stock with absolute potential that will someday become the next LDDS turned WorldCom before the fall. The truth is that little businesses become big businesses everyday. Unfortunately, those that make it to the big leagues are quite few in number when compared to those who do not.
6. Too much. There is no history of penny stocks. So many get caught up in the "high return potential" of them which blinds ordinary investors. Example: You invest only $5 worth of penny stocks. You could gain a lot more fast, but you could lose your whole investment even faster. If you lose the whole $5, that's 100% of your investment gone! Sure its not much, but think if you invested $1,000 in these "investments."
7. company could be fake or at best financially unstable - you could lose entire investment suddenly or have trouble finding a buyer when you want to sell
8. the only risk is that you loose your pennies.
9. lack of info lack of liquidity and lack of a company all together lol (sometimes) and extreme volatility. i scored a 34% return on penny stock in 4 days and will never return to them because i know a good penny stock trade PURE luck